AT&T Canada noteholders start legal action

New York, May 9 - Institutional investors holding US$458 million of AT&T Canada's notes said they have started legal action against the company.

The investors filed an oppression application against the company in the Ontario Superior Court of Justice claiming that the conduct of AT&T Canada and its directors has been "oppressive and unfairly prejudicial to, and has unfairly disregarded, the interests" of the company's noteholders.

Among other things, the noteholders are seeking the replacement of all the current directors of AT&T Canada or orders regulating the conduct of current directors; an order restraining AT&T Canada from collapsing any in-the-money foreign currency swaps; and an order requiring AT&T Canada and its directors to preserve assets and liquidity pending a restructuring.

Noteholders named in the application include U.S. and Canadian funds managed by Citigroup Global Investments, Elliott Management Corp. and Strong Capital Management. Holders a further $250 million notes are supporting the application.

Bingham Dana LLP is serving as overall lead counsel for the noteholder group.

In a response, AT&T Canada described the noteholders' oppression applications as "without merit and based on groundless allegations."

The company said it will "vigorously defend" against this action.

"The board and management are committed to act in the best interests of the company and is committed to building the company for the long term for all stakeholders," said Purdy Crawford, AT&T Canada's chairman of the board, in a news release.

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